Get Expert Investment Financing
- Matched with investor-friendly lenders
- Fast pre-approvals-no W2s required
- Financing options fro rentals, BRRRR, STRs
- Scale your portfolio with confidence
Investing in real estate is one of the most reliable paths to long-term wealth. However, financing your first property—or your tenth—can be a challenge without the right strategies. In 2025, with interest rates fluctuating and lending criteria tightening, choosing the right financing method is more important than ever. Here are seven proven ways to finance your next investment property this year.
1. Conventional Mortgages
Conventional loans remain a popular choice for investors with solid credit and verifiable income. These loans typically offer the lowest interest rates and stable, long-term financing, making them ideal for investors seeking predictability.
Pros:
- Lower interest rates
- Long-term fixed payments
- Widely available from banks and credit unions
Cons:
- Strict income and credit requirements
- Property count limits (usually 10 properties per borrower)
- Full documentation needed (W-2s, tax returns, etc.)
Best For: Investors with steady W-2 income and strong credit looking for long-term holds.
For a detailed guide, check out our article on Comparing DSCR Loans to Traditional Mortgages.
2. DSCR (Debt Service Coverage Ratio) Loans
DSCR loans are tailored for real estate investors who want to qualify based on the property’s income rather than personal income. This is especially useful for self-employed investors or those with complex income streams.
Pros:
- No personal income verification
- Quick approvals
- Scalable for large portfolios
Cons:
- Higher interest rates than conventional loans
- May require a higher down payment
Best For: Investors prioritizing cash flow and portfolio growth.
Read our comprehensive guide on DSCR Loans for Real Estate Investors for more insights.
3. HELOC (Home Equity Line of Credit)
If you already own a property with significant equity, a HELOC can be a smart way to fund your next deal. This revolving line of credit allows you to borrow against your equity as needed.
Pros:
- Flexible access to funds
- Only pay interest on what you use
- Can be reused as you repay
Cons:
- Variable interest rates
- Risk of losing your property if you default
Best For: Investors looking for flexible capital without selling their existing properties.
Check out our article on Leveraging HELOCs for Real Estate Investment Success for more tips.
4. Private Money and Hard Money Loans
Private money and hard money lenders provide short-term, high-interest loans based on property value and potential returns rather than borrower income.
Pros:
- Fast approvals
- Flexible terms
- Ideal for fix-and-flip projects
Cons:
- High interest rates
- Short repayment periods
Best For: Investors doing quick flips or high-return BRRRR projects.
Get Expert Investment Financing
- Matched with investor-friendly lenders
- Fast pre-approvals-no W2s required
- Financing options fro rentals, BRRRR, STRs
- Scale your portfolio with confidence
5. Partnerships and Joint Ventures
Teaming up with other investors can help you pool resources and reduce risk. This approach is common for large commercial deals or multifamily investments.
Pros:
- Shared capital and risk
- Access to larger deals
- Diverse expertise
Cons:
- Shared profits
- Potential for conflicts
Best For: Investors who prefer collaboration or need additional capital for bigger deals.
6. Bank Statement Loans
These loans are designed for self-employed borrowers who may struggle to prove their income with traditional W-2s and tax returns.
Pros:
- No traditional income verification
- Ideal for self-employed borrowers
Cons:
- Higher interest rates
- More documentation than DSCR loans
Best For: Entrepreneurs and self-employed investors.
7. Seller Financing
This creative approach involves the property owner acting as the lender, bypassing traditional banks entirely.
Pros:
- Flexible terms
- Potentially lower closing costs
- Faster closing
Cons:
- Often higher interest rates
- Limited availability
Best For: Buyers who need flexible terms or cannot qualify for traditional loans.
FAQs
Which financing method is best for beginners?
Conventional mortgages and FHA loans are often best for beginners, as they offer lower interest rates and down payment requirements. However, DSCR loans can be ideal for those with strong property cash flow.
Are DSCR loans only for seasoned investors?
No, even first-time investors can use DSCR loans if the property generates sufficient income to cover the mortgage.
Can I use a HELOC to buy my first rental property?
Yes, if you have enough equity in your primary residence or another investment property, a HELOC can be an excellent way to fund a down payment or renovation costs.
Read Next
- How to Use a HELOC to Buy Your Next Rental Property
- The Complete Guide to Real Estate Investor Financing
- DSCR Loans for Short-Term Rental Properties
Ready to finance your next deal? Get started with your personalized financing strategy today!
Our advise is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.
